Which of the Following Statements Is Incorrect

question 57

Multiple Choice

Which of the following statements is incorrect?

• A) S corporation losses can offset shareholder income from other sources.
• B) S corporation income is taxed to shareholders when earned.
• C) S corporations must allocate income and expenses to their shareholders based on their proportionate ownership interest.
• D) The number of S corporation shareholders is unlimited.

---

Definitions:

Consumer Price Index

A device that evaluates the average adjustment over time in the spending of urban consumers on a carefully selected series of consumer goods and services.

Real Interest Rate

The interest rate that has been modified to take inflation into account, representing the actual cost of borrowing and the genuine return on investments.

Nominal Interest Rate

The interest rate as stated without adjustment for inflation, representing the raw interest rate agreed upon in financial transactions.

Nominal Interest Rate

The interest rate before adjustments for inflation, representing the actual rate of interest earned or paid on a loan or investment.